A financial plan designed to cut costs and reserve declining reserves at Memorial Hospital of Sweetwater County was met with severe criticism by the Sweetwater County Commissioners last week.
The conflict between the county and hospital board came to a head and resulted in the resignations of three board members, the removal of two other members, as well as the resignation of the hospital’s CEO and the hospital’s chief legal counsel.
The commissioners requested the hospital’s plan as a result of their days of cash on hand approaching a point where MHSC could default on revenue bonds from improvements initiated in 2006.
According to a media release from the commissioners, the cash on hand situation was the primary issue when they denied the construction of a $50 million surgical center requested by the hospital administration.
The days of cash on hand measure reflects how much operating cash the hospital has to remain open if it were unable to generate revenue. Currently, the hospital has 88 days cash on hand, but will default on its revenue bonds if the cash on hand declines below 75 days. At that point the hospital would be required to hire an outside consultant and follow their directives to increase profitability. In June of 2013, the hospital had 236 days of cash on hand. The commissioners sought a plan from the hospital prior to that action occurring.
“We’re concerned we’re going to default on the bonds, so here we are,” Commission Chairman Reid West said.
The hospital’s reserves have continually decreased during the past few years, despite earning more in revenue.
The plan, a single sheet of paper released by the hospital last week, was immediately criticized by the commissioners as not having the detail they wanted to see.
“I expected more of a business plan like what you’d take to a bank,” West said.
Commissioner Wally Johnson was less reserved about his disappointment in the plan, saying it wasn’t worth the paper it was printed on.
The plan aimed to save approximately $4.5 million, roughly 19.5 days of cash on hand.
The plan, initiated August 2016, outlined a number of expenses the administration team believed could be cut, including staff positions, the agreement with Castle Rock Hospital District, increased financial performance and utilization reviews.
Aside from listing those line items, exact specifics as to how these goals would be achieved were not listed in the plan.
According to former board chairman Joe Manatos, reducing the amount spent in traveler expenses would come from filling vacant positions at the hospital, which despite the cost would ultimately save the hospital money. Traveler expenses come from times when the hospital is short staffed and seeks traveling nurses and doctors to fill in.
Former board member Grant Christiansen said staff reductions would save the hospital money after the end of the fiscal year as positions would be consolidated and efficiencies in operations increased.
According to the county commissioners’ release, while the net patient revenue did increase 51 percent during the past five years, other measures decreased. The commissioners state all the financial ratios compare negatively to Standard and Poor’s BBB hospital medians.
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